Implementing effective financial wellness programs in the workplace likely has tangible monetary benefits for companies, according to recent research from Financial Finesse.
[The report, released last month, can be found here.]
The study focused on the effects of one Fortune 100 company’s financial wellness program over a 5-year period (2009-2014). The specific company remains anonymous.
But the results are interesting: the company achieved savings for employees who were financially secure and confident; meanwhile, there were real costs associated with employees who were financially unwell.
A visual snapshot of the findings:
It makes sense, as financial suffering can manifest itself in absenteeism, among other things. Employee Benefits News explains:
Employees who have the lowest level of financial wellness take more unplanned days off than those with a higher level of financial wellness, the report found. “There is a linear relationship between absenteeism and improvements in an employee’s financial wellness score,” says Cynthia Meyer, resident financial planner at Financial Finesse. “As the employee’s financial wellness improves, we see a direct correlation in the reduction in absenteeism.”
Financial stress can affect a person’s health in a myriad of ways, so they get sick and need to take leave. Financial issues, such as unpaid parking tickets or worries over keeping the lights on can also cause financial stress. This either translates into more days off from work or employees who are distracted by their woes at work and therefore are less productive.
All told, the researchers found improving an employees wellness score from 4 to 5 results in savings of $94 per employee.
How can employers achieve that improvement in financial wellness? The report has insights regarding areas to focus on:
The most common steps taken by employees that improved their financial wellness score from 4 to 5 were:* Establishing an emergency fund (+50%)* Calculating the need for and/or purchasing life insurance (+39%)* Paying off credit card balances in full (+38%)Other notable improvements include a 56 percent increase in the percentage that understand the tax implications of investment and retirement accounts, and a 55 percent increase in the percentage that feel confident in their investment allocation.Employers can help facilitate a shift in the overall workforce financial wellness score from 4 to 5 by offering financial education in the following areas: personal financial basics, retirement planning, and investment planning.For employees that improved their financial wellness score from 5 to 6, the most common steps taken were:* Developing a master asset allocation strategy (+142%)* Rebalancing investment accounts (+68%)* Taking a risk tolerance assessment (+41%)Not surprisingly, there was a 61 percent increase in the percentage that feels confident in their investment allocation. Other notable improvements include a 45 percent increase in the percentage that understand the tax implications of investment and retirement accounts, and a 73 percent increase in the percentage of parents that know how much they need to save for college and are on track to meet that need.Employers can help facilitate a shift in the overall workforce financial wellness score from 5 to 6 by offering financial education in these areas: retirement and investment planning, tax strategies, and utilizing company benefits.
